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An independent review has concluded that a scheme which saw Rugby Football Union chief executive Bill Sweeney and other executives receive sizeable bonuses was “an appropriate renumeration structure”.
The report, commissioned by the RFU and carried out by law firm Freshfields, said: “In our view the LTIP was an appropriate remuneration structure for the RFU to introduce in 2021, given the RFU’s objectives at that time”.
The bonus scheme – long-term incentive plan (LTIP) – was set up to persuade executives to remain at Twickenham during the post-pandemic era.
But a special general meeting of the RFU will take place on 27 March, at which Sweeney will face calls for his removal from rebel clubs angered by the bonus and pay outcry that has engulfed Twickenham since last November.
Tom Ilube subsequently stepped down as RFU chairman in December, with Sir Bill Beaumont taking over on an interim basis.
The LTiP resulted in Sweeney being paid a bonus of £358,000 on top of an increased salary of £742,000 for the last financial year.
Further bonuses totalling almost £1million were paid to five other executives, despite the RFU reporting a record operating loss of £37.9m and making 27 staff redundant.
Sweeney wanted payment of the LTIP to be deferred, aware of the perception created by receiving it at a point in the four-year cycle of financial planning when losses were inevitable because of the World Cup and when staff were being made redundant.
Freshfields considered the plan’s provenance, design, implementation and communication.
In its report, Freshfields said: “Based on our review and analysis of the relevant documentation, our interviews with key stakeholders and our consideration of the wider contextual background, we consider that the process for the design and implementation of the LTIP was robust and the structure was sufficiently tested against the RFU’s objectives, governance standards, stakeholder expectations and best practice.”
But they also identified “key weaknesses” in the process in which the LTiP was put in place and implemented.
These include insufficient record-keeping, with recommendations that documentation of key decisions and consultations with stakeholders “should be recorded in more detail and should include more detail as to how suggestions were discussed and responded to.”
They also said that future RFU annual reports could include full breakdowns of renumeration packages and rationale for any changes.
Elsewhere, it is revealed that new board directors felt they were not provided with sufficient information in relation to the LTiP, with a “more formal and consistent induction process” recommended.
Responding to the report, RFU president Rob Udwin said: “We are pleased the report from Freshfields recognised the design and implementation of an LTiP and its vesting were appropriate in the circumstances.
“There are some specific recommendations and wider observations on the governance structure, the roles of Council members on the board and committees, and the communication routes between the executive, board, Council and wider game.
“It is important to recognise these, and they will feed into and inform the current governance and representation review, and the communications review that was agreed with Council in December.
“The review also suggested there could have been further disclosure in the annual report and accounts on the LTiP. This point is noted.”
PA
